Are Apple's services a new era for the company or just a filler before the next industry-changing product?

This article may contain personal views and opinion from the author.
Are Apple's services a new era for the company or just a filler before the next industry-changing product?
The past 10 days or so were quite eventful for Apple, but things didn’t transpire in the way most people expected them to, at least not before we got more information about the nature of the March 25 event. With the leaks about new Apple products coming steadily, people expected that hardware and software will share the stage at the Steve Jobs Theater. That wasn’t the case, however, and if anyone still needed proof that Apple is shifting its focus towards services, you couldn’t get a clearer one than what actually happened. Let’s talk some more about why Apple chose to go for the “quiet” product release and focus all attention on its services.

Apple’s quiet product releases speak loudly about the company’s new direction 


If there’s one sure thing in this world, it’s that no one likes telling us how amazing Apple products are more than Apple itself. The company’s presentations are infamous for the number of superlatives that are thrown around generously, whether describing the design of a product or its functionality. Watching an Apple event you’d think that the company is God’s gift for humanity, saving us from the mediocrity we’ve been engulfed in. Through gadgets. That look nice.

Of course, every company overexposes the qualities of its products while leaving shortcomings in the fine print. That’s how marketing works. But Apple’s mantra is especially strong and to a large extent backed up by the products themselves. Naturally then, when we heard that new iPads and other products are coming, we expected to get more of the same in terms of praise. And we did, but in a form much different from what we’re used to.

Instead of being pulled out of a pocket or beamed down as if they just descended from the heavens, Apple’s new products were announced via press releases on the company’s website. Now, that’s not the first time Apple has done this, but in lieu of its then-upcoming event, it looked a bit like Apple is saying “Oh and by the way, here are some new products.” And after seeing what the new releases were, no one really disagreed with the way Apple launched them. The new iMacs, iPads and AirPods were all sporting the same design as their predecessors, with only an appropriate bump in specs.
 
Hey, support for the Apple Pencil is a pretty big deal, right? Right?

Hey, support for the Apple Pencil is a pretty big deal, right? Right?

There are two ways to look at what Apple did. In camp one, the common opinion is that this product “refresh” was lazy. Switching some components for others, after all, can’t be that much hard work, right? But people that want the latest and greatest will still go buy them. Just another money grab by Apple then. Case solved! Or maybe, the company has run out of new ideas and it’s now stuck, unable to innovate further. The end is nigh! Sell your Apple stock!

In the other camp, things are a bit calmer. People there see the aforementioned products as industry staples that need no changing. After all, everyone recognizes the iPad with its iconic home button. And iMacs can be found in almost every successful startup's office, so customers clearly like them as well. “Don’t fix what ain’t broken,” the saying goes, and in Apple’s case, that’s a motto to go by. Give people the performance they’ve come to expect in the shape they’re used to and it’s business as usual. Lack of change isn’t an issue unique to Apple, however. As we’ve talked before, significant upgrades have become hard to achieve. Aren’t we forgetting something though?

The iPad Pro conundrum 


Are Apple's services a new era for the company or just a filler before the next industry-changing product?

We can’t ignore the elephant in the room, the latest iPad Pro. With it, Apple did some quite drastic changes – not only in terms of design but some core functionality as well, by switching the Lightning port to a USB Type-C. The changes were warmly welcomed and people expected that this new philosophy will trickle down to other Apple products as well. Except it didn’t. The new iPad and iPad Mini are still rocking the Lightning port and so is the new AirPods charging case. The tablets didn’t get the Pro’s thinner bezels either, nor FaceID, which Apple is so proud of.

Rumor has it that the 2019 iPhones will still be using the Lightning port as well. This fragmentation is unusual for a company that’s built on ease of use and interconnectivity of accessories.

Was the iPad Pro move meant to diversify the “Pro” line from the rest of the iPad family and justify the higher price? Or was it the first step of a bigger plan that got changed since then and instead of proper new products we got a rushed specs upgrade? We’ll probably never know, but with the company’s new strategy, does it really matter? Hardware is now just an afterthought, after all.

The chicken or the egg: Apple edition


After Apple’s March 25 event and the slew of services it announces, it’s now accepted as obvious that Apple is now going to be a services-centric company. But let’s not forget that despite Apple’s software division making great leaps in terms of revenue over the past couple of years, the main cash cow is still the iPhone. So the shift of focus raises the question: Are services coming forward on their own merits, or is the change necessary because the iPhone is underperforming?

The iPhone XR slipped into many pockets, but not enough

The iPhone XR slipped into many pockets, but not enough

It’s not a secret that the global smartphone market has been slowly but steadily shrinking over the past year. But it’s also not a secret that the 2018 iPhones haven’t met Apple’s own sales expectations. Almost every day there’s a part supplier announcing a reduction in orders and lowering of quarterly revenue expectations. This doesn’t look good in the eyes of investors and naturally, they want to know what Apple is going to do about it.

So while there’s no doubt that new services were on Apple’s agenda either way, the unsatisfactory iPhone results might have forced the company’s executives to put the foot on the gas and make the new apps a priority sooner than expected.

Hints that this could indeed be the case came straight from Apple’s presentation during its Special Event. Usually, when Apple is releasing a new product, it’s available either right after the event or a week or two later so people’s hype about the release can immediately be turned into sales. This wasn’t the case with Apple’s new services, however. What we got as release dates instead was the following:

  • Apple Arcade: Fall 2019
  • Apple News+: Available now in the US and Canada, coming to the UK and Australia Fall 2019
  • Apple TV+: Fall 2019
  • Apple Card: US only, Summer 2019

Spring 2019 has barely begun, and Apple is announcing products that will be available in fall? That’s out of the ordinary, to say the least. Will Apple have another event in the fall when it will remind everyone about its services and then release them? If yes, then what was the point of this one? It’s unusual for Apple to mark its territory like that but it seems that the situation right now required some urgent action. Even the names feel a bit rushed: News+ and TV+? TV+ is probably one of the most overused names in the TV industry. It just doesn’t sound fitting for the amazing service Apple is taunting it to be.

It looks so heavenly, though

It looks so heavenly, though

And sure, TV shows and games need time to be developed, but so do hardware products, yet we never see a sneak peek of the iPhones that are coming in fall (except in leaks). Probably the only product Apple mentioned without releasing it was the infamous AirPower that’s constantly a few months away from becoming a reality. But even if the fall service releases go great and new subscribers are joining in droves, this might not be the sustainable long-term solution Apple is looking for.

Why services can never fully replace hardware


iPhones are the world’s most popular phones, at least when it comes to brand awareness, that’s for sure. While they’re a staple in the US, many other countries are big markets for Apple as well: China, Japan, Germany and so on. When Apple wants to sell its iPhones in another market, it has to make sure to get the appropriate regulatory approval and then translate its software in the local language and it’s pretty much done. Overall, the rest of the world contributes a lot more to iPhone sales than the US when it comes to pure numbers.

With services, however, Apple might have a hard time achieving that. Beyond the issue of translating and dubbing/subtitling shows and movies, there’s also that of how appropriate the content will be for other countries culturally speaking. Yes, Hollywood movies are watched everywhere and shows like Game of Thrones are a global phenomenon. But far fewer people are interested in reading articles about mostly American problems. This is probably why services like Apple News+ might never make it to countries that don’t have English as an official language. Another cultural difference is paying for subscription services. While businesses like Netflix, Spotify Premium and others are well established and profitable in the States, in many countries, people aren’t so used to paying for something they don't own. And even if they do have an iPhone, it’s far from a sure bet that they’ll become Apple subscribers as well. This can drastically reduce the cash flow Apple will receive from foreign markets.

Of course, Apple won’t stop making (or selling millions of) iPhones anytime soon, so there’s no need for the services to take the whole weight of the hardware segment. Plus, there might be other products that could fuel a new era of hardware dominance.

Are we on the verge of Apple Hardware 2.0?


While current Apple devices might be peaking, it doesn’t mean that the shift towards services will be permanent. What we’re experiencing right now could be just a temporary lull before the next generation of Apple products is ready for release.

Not long ago, Apple CEO Tim Cook said in an interview that the lasting impact he wants Apple to make is not in technology, but in health. We’ve seen the company’s efforts in that regard already paying off. It’s not rare to hear about a person’s life being saved by an Apple Watch. In the upcoming years, we might see a number of new products no one is expecting (at least right now, and we’re sure there’ll be leaks) that will compliment Apple’s health initiative. One thing is certain: there is money in healthcare. And if Apple manages to make living a healthy life fun and trendy (which it already kind of is) then Tim Cook will be laughing all the way to the bank.

Are Apple's services a new era for the company or just a filler before the next industry-changing product?
But let’s not forget the other field Apple is focusing on: augmented reality. The company’s AR headset has been spinning in the rumor mill for years now, but recently it’s starting to get more traction and clues coming from the mothership at Cupertino are pointing that something important is coming in one shape or another. Will it be as revolutionary as the first iPhone or iPod? There’s definitely potential for it. If it is, Apple will be back on the forefront of innovation with others looking to catch up.

Until then, however, Apple’s devices are becoming more and more just differently shaped portals to its ecosystem and now more than ever, we can even access it from third-party hardware. Is that out of necessity or just part of the larger scheme Apple is working on? As always, time will tell.

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48 Comments

1. cmdacos

Posts: 3889; Member since: Nov 01, 2016

There is nothing exciting about these services. Only news is out now and they took Texture and made the service worse. Nice work. When someone else comes out with the next big thing, Apple will work to catch up again then.

7. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

Apple doesn’t need to play catch up. You may feel that way, but the reality is that Apple has so much cash it’s beyond sick. Yes we consumers want more from them, but I believe we are in for surprise within the next few years. Waiting on the next big thing from them.

31. lyndon420

Posts: 6518; Member since: Jul 11, 2012

Apple has sooo much cash...yay!! But they're doing NOTHING with it.... yawn!! They just recently cancelled their wireless charger project... After almost 2 years of hype lol.

18. whatev

Posts: 2136; Member since: Oct 28, 2015

Tell me what is the next best thing now? Enlighten us, maybe punch holes in the screens or imprecise FPS?

24. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

Not sure, but let me chime in my 2 pennies... 1. All glass/screen iPhone. Cameras, Flood illuminator, etc will be imbedded within the screen. 2. Tesla competitor. Auto industry. 3. Netflix competitor. Streaming Industry. 4. AR. Enhancement and breakthrough over Google Glass. These are just a few that will keep Apple relevant for the next 5-10 years.

28. whatev

Posts: 2136; Member since: Oct 28, 2015

Those are not “next best things” because they will be apple’s, didn’t you know that? Only the copies after Apple does that will have the impact to be considered the next big thing #androidtrolllogic

37. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

Again no need to debate the next best thing. The consumer decides if this adds value to their lifestyle as there is no need to get upset at Apple about creating innovation or “copies” (your words). At the end of the day you and me wish they had that amount of cash on hand as Apple.

30. lyndon420

Posts: 6518; Member since: Jul 11, 2012

Apple will be all about services for the next year or so. The real innovation will come from elsewhere...just the way it is...the way it always is lol.

33. lyndon420

Posts: 6518; Member since: Jul 11, 2012

Definately filler. Game changing anything won't come from Apple that's guaranteed. They just released a gaming platform for children, and cancelled their wireless charger after a year and a half of hype lol.

2. pogba

Posts: 85; Member since: Jun 13, 2018

Their smartphone business is stagnating. These are just more ways to rip people off. It's what they do best.

8. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

Not defending Apple on this, but how are they ripping people off?

15. BLUEBLASTER

Posts: 915; Member since: Feb 23, 2014

Service for games, TV, music and newsstands. Podcasts and Books next? There are too many subscription services on top of a $1000+ phone

20. mackan84

Posts: 211; Member since: Feb 13, 2014

Still we buy loot boxes, Netflix, Spotify, books and newspapers with our $1000 dollar phones already without apples help...

25. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

Exactly mackan84 goodnpoint!

26. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

Look at what cable companies that have been doing to us for years!!!!!! Providing us service we didn’t use or don’t need. Over time there will be an all in one pricing subscription, however I believe Apple is testing the waters on consumer interest. They may change the pricing structure.

32. lyndon420

Posts: 6518; Member since: Jul 11, 2012

Apple also helped to kill off the music (physical disc / media) industry. No reason to hang out at the mall anymore.

3. Wazupmrg

Posts: 141; Member since: Apr 10, 2017

Industry changing. Hahahahahahahaaaaa. That hasn't happened for 10 years

6. blingblingthing

Posts: 897; Member since: Oct 23, 2012

What about a car with a smart phone included in it?

22. seantn4

Posts: 42; Member since: Dec 11, 2018

you mean basically a Tesla?

4. CreeDiddy

Posts: 2128; Member since: Nov 04, 2011

I believe these services will allow Apple to maintain their user base for healthy services revenue for the next 5 years. Regardless if iPhone’s are declining, they are investing in other areas to diversify their risks. I believe Apple is content with 200 million sold a year.

5. domfonusr

Posts: 1073; Member since: Jan 17, 2014

If anything, Apple would be content to raise prices more, and I think people in the western world would still buy them. Apple could help people get loans to purchase them or lease them, like a new car, sort of. Apple could build and sell just 20 million iPhones a year, and make a huge profit, if they were designed even more to be personalized luxury items and still have the unparalleled user experience, starting at $10,000 apiece. That would put it way out of my reach, but it could make sense for Apple to do that. It would certainly reduce their expenses, even if the cost of labor went up. Goodness, they could bring assembly back to the US! I'm still waiting for the iPhone XR to be just $200 at some point in the next two to three years...

29. mootu

Posts: 1422; Member since: Mar 16, 2017

If you think anyone could sell 20 million phones a year at $10,000 apiece then you are living in an absolute dreamworld.

40. domfonusr

Posts: 1073; Member since: Jan 17, 2014

Believe it or not, that corresponds to the top 0.5% of earners worldwide if they cycle once every two years. There are enough rich people to sell to, especially in mainland China.

21. mackan84

Posts: 211; Member since: Feb 13, 2014

The key-figure is to maintain 1 billion active devices

39. domfonusr

Posts: 1073; Member since: Jan 17, 2014

Why should they bother to maintain a billion active devices? They will make a lot more money if they allow lower-paying customers to drop away, and tighten up pricing. Furthermore, with fewer active devices, there will be a much lower chance that anyone will spend time making viruses and malware with the intent of putting such things on Mac OS X or iOS (and yes, it has happened before, and will again if they don't do something to make their OS's a less stimulating target) for the purpose of hacking.

45. mackan84

Posts: 211; Member since: Feb 13, 2014

Because one billion active user would ensure more customers subscribing to their services or Apple Pay, credit card that’s locked to their iPhone etc etc... Viruses?... Then they’ll release Apple Anti-malware or something for just $15 dollars a month. Fewer sold is never going to give more money no matter what price tag.

9. darkkjedii

Posts: 30836; Member since: Feb 05, 2011

The next game changing product from Apple, is AirPower. It's so revolutionary, and magical, you don't even have to have one to charge on it. That took courage...wait.

17. IT-Engineer

Posts: 523; Member since: Feb 26, 2015

When he announced it during the event on stage, you could see his face that he was lying!! A technology that no one can implement yet, except for apple he said. Well they haven't implemented a single wireless charger! Imagine, apple is the only company that has a device that can wirelessly accept charge and they don't offer a wireless charger! Back to the topic, Apple is not a service company, these services will take apple a long time and money to make them work. The only company that exists on services and have the muscles to pull such stunt is Google, and they did with their cloud service gaming. That's a true gaming subscription offered multiplatform. As long as apple will stay closed on a single platform, they will keep on losing customers and will eventually fail in these products.

34. lyndon420

Posts: 6518; Member since: Jul 11, 2012

But hey...they have a new gaming platform to keep children from disrupting their parents while they're on Facebook etc.

10. CableTelcontar

Posts: 86; Member since: Nov 19, 2014

To me, most of these "services" make little sense outside the US and parts of Western Europe. There is only so much money to be made from these regions. Look at Hollywood movies for example. Captain marvel makes 100m in the US but 1 billion in total. That is 90% outside the US. If Apple is to be making only 10% of what they could, I don't think that's their plan.

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